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Help Your Clients Plan Ahead With T. Rowe Price Retirement Funds
Each fund is professionally managed and periodically adjusted with a specific target retirement date in mind. The Retirement Funds are designed to adjust to changing needs up to and throughout retirement in a single investment option.
Help Your Clients Plan Ahead: Make Retirement a Reality
You know the kind of lifestyle your clients dream of having in retirement. Reaching these retirement goals is not a given: You have to plan ahead. With good information and some help, getting clients where they want to go may be easier than you think. One option is to use T. Rowe Price Retirement Funds. The Retirement Funds are professionally managed and periodically adjusted investment options that can help clients save for retirement.
Retirement Funds Adjust Over Time
When retirement is still a long way off, it may make sense to choose an investment strategy with a higher concentration in stocks since investing over a longer time horizon may allow investments to weather the market’s ups and downs. As retirement nears and the goal changes to preserving savings, investors commonly adjust their portfolios to include a higher concentration of lower-risk investment options (compared with stocks).
Knowing when and how to make these adjustments can be a challenge. With Retirement Funds, the investment portfolios are automatically adjusted over time, both before and after retirement. A Retirement Fund geared toward a longer time horizon, such as 30 years or more, has a higher risk/return potential, which gradually becomes more conservative over time.
As the chart below shows, the Retirement Funds’ allocations are actively managed for approximately 30 years after their target retirement dates before arriving at their final 30% stock, 70% bond ratio. This strategy can help savings continue working in retirement.
Actively Managed Through Retirement Years
The principal value of the Retirement Funds is not guaranteed at any time, including at or after the target date, which is the approximate year an investor plans to retire (assumed to be age 65) and likely stop making new investments in the fund. If an investor plans to retire significantly earlier or later than age 65, the funds may not be an appropriate investment even if the investor is retiring on or near the target date. The funds’ allocations among a broad range of underlying T. Rowe Price stock and bond funds will (with the exception of the Retirement Balanced Fund) change over time. The funds (other than the Retirement Balanced Fund) emphasize potential capital appreciation during the early phases of retirement asset accumulation, balance the need for appreciation with the need for income as retirement approaches, and focus on supporting an income stream over a long-term postretirement withdrawal horizon. The funds are not designed for a lump-sum redemption at the target date and do not guarantee a particular level of income. The funds maintain a substantial allocation to equities both prior to and after the target date, which can result in greater volatility over shorter time horizons.
Mix It Up: Each Fund Invests in a Number of Underlying Funds
The Retirement Funds are made up of other T. Rowe Price mutual funds. That means, whichever fund you choose, you get a mix of different investments investing in hundreds or thousands of securities—in large and small companies, both foreign and domestic.
Investing in a Retirement Fund
T. Rowe Price Retirement Funds are professional investment solutions designed for people who want a single diversified investment that automatically adjusts over time. Each is a mutual fund composed of other mutual funds, offering:
- One-step portfolios. Retirement Funds are a mix of many different mutual funds.
- Professional diversification* that may help reduce the impact of the market’s ups and downs.
- Stock exposure that has the potential to help outpace inflation.
- Automatic rebalancing among stocks and bonds that can help the funds’ allocations stay on track.
* Diversification cannot assure a profit or protect against loss in a declining market.
